The French financial giant expects vehicle leasing to become the third pillar of its business, along with retail and investment banking, by combining ALD and LeasePlan.
Société Générale said the new combined entity, which will have a fleet of 3.5 million vehicles, would be well positioned to take advantage of trends including the rise of car sharing and the more widespread use of electric vehicles.
ALD manages and leases vehicles to companies. Privately held lease plans compete in similar segments but also cater to individual consumers.
Societe Generale over the years has focused on increasing profitability, especially in the wake of the pandemic, when it reported losses related to its specialty of manufacturing and selling complex structured products. One of the largest banks in France said in 2020 that it would take less risk in its investment bank.
It recently sold its asset-management arm, Lycor Asset Management, to French asset manager Amundi SA for €825 million.
The efforts are paying off: The bank nearly doubled its profit in the third quarter from a year earlier, and its share price rose more than 77% last year.
The bank’s stock was up about 2% in midmorning trading after the leaseplan deal was announced. It is expected to close by the end of the year.
Société Générale listed ALD in 2017, hoping to give investors a better view of the growing business. ALD’s share price rose 8% on news of the deal on Thursday, but traded at roughly the same level as it did after its IPO nearly five years ago.
Societe Generale will retain a 53% stake in the combined group. The tie-up is expected to add 5% to Societe Generale’s earnings and about 80 basis points to its return on equity, a measure of profitability, the bank said. It will also reduce its group capital by about 40 basis points.
ALD will pay €2 billion in cash to acquire LeasePlan from a consortium led by private-equity firm TDR Capital. Shareholders of LeasePlan will also take a roughly 31% stake in ALD. TDR and its partners bought Amsterdam-based Leaseplan for €3.7 billion in 2015, later dropping plans to list it.
Write to Julie Steinberg at [email protected]